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So, why did the rate go up again and does that mean it’s time to celebrate? Although it is positive news, maybe it isn’t time to let our hair down just yet – let’s look at what this increase means for the industry.

What led to this decision?

In June 2023, the Fair Work Commission (FWC) released their decision on the Annual Wage Review (AWR). Regarding aged care, the primary outcome handed down by this investigation was that the minimum rates under the Nurses’ Award would increase by 5.75 per cent from 1 July 2023.

So, although we received a significant boost to the AN-ACC starting price on July 1, the FWC AWR decision had not been factored in. To fund the decision, in July 2023 the Independent Health and Aged Care Pricing Authority (IHACPA) recommended that the AN-ACC starting price increase from $243.10 to $249.34.

On 1 December, the Department responded by increasing the AN-ACC starting price to $253.82.

The decision to increase the starting price above the IHACPA’s recommended rate was to effectively ‘back pay’ providers to when the minimum award rate was mandated, as if the starting price increase had occurred on 1 July 2023.

It’s important to note that providers will not actually receive a lump sum back payment. Rather, this increased rate will make up the difference as if the starting price had been increased to $249.34 for the period between 1 July 2023 and the next scheduled rate change later this year.

On 15 March 2024 the FWC announced further wage increases between 3.2 per cent and 13.5 per cent in their Stage 3 decision. This may impact the future AN-ACC starting price above standard indexation.

What are the takeaways?

We have conducted a benchmarking analysis to provide some meaningful takeaways for the industry.

As of 31 December 2023, our MyVitals benchmark demonstrated that the average total AN-ACC daily funding was $269.92 per resident. Without the rate change, this would have otherwise been $258.52 per resident – an increase of $11.40 per day.

Taking a mid-sized 60-bed facility, the impact of this daily increase results in an additional $684.00 per day, or $249,660 of annual funding, on average.

Meanwhile, using the average costs of delivering this care, we estimate the 5.75 per cent increase to the Nurses Award adds $113,685.32 to employment costs each year.

Extrapolating this out for the 188,000 residents in residential aged care (per the Australian Institute of Health and Welfare 30 June 2022), this rate increase produces an additional $782 million for the industry.

What about ongoing reclassification?

Of course, parallel to this, regular workflow is ongoing to ensure that all residents’ care needs reflect their AN-ACC classifications.

Looking at the period October to December 2023, our benchmark demonstrates that the average reclassification outcome has dropped 4 per cent compared to the period July to September, but this is still a 10 per cent increase compared to the period April to June.

The reclassification rates have maintained consistency between these quarters, which suggests that providers have not dropped off on submitting residents for reclassifications where their care needs change.

All of this indicates that the industry’s reclassification outcomes are stabilizing, and AN-ACC assessors and facilities appear to be working effectively in tandem to reach more consistent outcomes.

This will remain a key area to consider in 2024 and will be a crucial metric for determining the efficiency of your facility’s reclassification workflows through comparison to a stable benchmark.

So, is it time celebrate?

All things considered this is welcome news for the industry and it’s great to see that our carers and nurses are rewarded appropriately for all their hard work and ongoing effort to deliver quality care.

However, you may need to hold off on the champagne until you’ve considered how the increase impacts your organisation.

While many providers already pay above the award, it’s important to ensure you’re compliant with the new increase.

For assistance with analysing where your organisation stands in relation to AN-ACC and resident reclassifications, please reach out to Provider Assist. Our MyVitals analysis has been used by providers across Australia, with outstanding results.